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If you want a new iPhone 3GS for only $49, you no longer have to resort to a refurbished offering from Apple or wait for another week-long deal from Radio Shack. Beginning this Friday, AT&T will start selling the iPhone 3GS for $49. The only catch? You need a new two-year service contract and data plan. AT&T will include iPhone 3GS devices sold through AT&T and Apple.

First released in 2009, the iPhone 3GS has sold for $99 by AT&T and Apple since the iPhone 4 was unveiled last June. The iPhone 3GS, however, still runs iOS4, although the software upgrade alone obviously can't deliver certainly functionalities incumbent upon the hardware attributes of the 4th generation Apple smartphone. Still, the move by AT&T represents a clear step toward the most competitive pricing plan even unveiled for a previous generation iPhone.

Late last month we reported that pre-paid Android devices that currently retail for as low as $180 will drop in price by half early in 2011. As a result, many began speculating if AT&T or Apple would somehow react to the looming industry-wide price reductions affecting countless smartphone brands and virtually every major player in the mobile phone space. Clearly, AT&T is gearing up for the anticipated price wars ahead while helping deplete the older inventory now occupying the space that will be needed to stock the new devices 2011 has in store.